Amazon vs. Alibaba: Two E-Commerce Giants, a Big Valuation Gap, but Which Offers More Upside in 2027?

Amazon (AMZN) and Alibaba (BABA) are two of the world's dominant e-commerce and cloud computing companies, each operating in different markets and offering unique growth prospects. Amazon's core business includes online retail, third-party seller services, advertising, cloud infrastructure, and Prime subscriptions. In fiscal year 2025, Amazon reported revenue of $716.9 billion, a 12.4% increase year-over-year, and net income of $77.7 billion, resulting in a profit margin of 10.8%.

The company's Amazon Web Services (AWS) segment reported a 20% increase in annual sales, driven by the growing demand for cloud computing and artificial intelligence (AI) infrastructure.

Alibaba, on the other hand, operates one of China's largest e-commerce platforms and cloud computing services. In fiscal year 2026, Alibaba generated $148.4 billion in revenue, a 2.7% increase year-over-year, with net income down 19% from the previous year. The company's debt-to-equity ratio is approximately 0.25x, while its current ratio stands at 1.3x.

Alibaba's free cash flow was negative at $6.8 billion for fiscal year 2026, compared to positive $10.7 billion the previous year, due to substantial investments in AI and cloud computing infrastructure.

Valuation-wise, Alibaba appears cheaper than Amazon, with a Forward P/E ratio of 14.8 and a P/S ratio of 1.6, compared to Amazon's Forward P/E of 18.7 and P/S ratio of 3.3. However, Amazon demonstrates stronger revenue growth, with a 12.4% increase in 2025, compared to Alibaba's 2.7%. Amazon's diversified business model and substantial investments in AI and cloud computing infrastructure provide confidence in its long-term growth potential.

Despite intense global competition, regulatory scrutiny, and operational risks, Amazon's stronger financial performance and growth momentum make it the more compelling investment choice for the upcoming year.